The South Korean NFT Market is bigger than you think.
A brief introduction to the success of NFTs among South Koreans and South Korean companies.
When thinking about countries in which the demand for NFTs is high, South Korea is probably not one of the countries that you would think about. However, according to Google Trends dating from 2021, South Korea ranked 4th overall in terms of interest in buying NFTs. In terms of market numbers, the NFT market in South Korea was valued at $14 billion in 2021 with a projected value of $35 billion by the end of 2022.
As South Korea tend to be a leader in technological research, it is no surprise that citizens and especially companies are exploring new business opportunities to diversify their operations.
NFTs Adoption:
Samsung, LG Electronics, Kakao, Hyundai Motor… these major South Korean internationally famous companies have all announced or have already begun investing in NFTs projects. As an example, Shinsegae department store, owners of the largest department store in the world, introduced a collection of 10,000 NFTs on Opensea that sold out the day of their release in June 2022. The owner of a “Puuvilla”, a bear-like character, can enjoy many benefits when visiting one of the Shinsegae department stores such as valet parking passes, lounge access, and a discount system based on the ranking of the NFT they own.
Another example we could talk about is Hyundai, the car manufacturer. They created a concept called “Metamobility”. The goal of this concept is to expand customers’ brand experience. As a result, Hyundai launched in May 2022 a collection of 10,000 NFTs in their own NFT marketplace.
Not only do South Korean companies enjoy new money streams, but they also enjoy a brand-new way of doing marketing. Take our latest example, Hyundai, thanks to their NFT initiatives, they have amassed around 100,000 on their discord as well as around 75,000 followers on their NFT-related Twitter account.
As younger generations are keener to adopt technical progress such as blockchain or NFTs, it is no wonder that South Korean companies are targeting them. Those who have already bought cryptocurrencies in the past are more likely to purchase NFTs as it seems natural. With reports stating that over 5,5 million South Koreans actively trading on cryptocurrency exchanges among which males in their 30s account for 21.7% of them, the business and NFT-related marketing opportunities are enormous.
However, you might to be wrong to think that South Koreans are only looking for classic non-utility NFTs. The key for South Korean companies is to understand that the NFTs they plan to release should come along with unique benefits for the NFT holders and these benefits should be able to compete with other companies offering similar benefits.
When it comes to law and regulations, NFTs can be tricky to classify. In November 2021, Korea’s Finance Minister, Hong Nam-Ki, told that NFTs do not fall under the category of “Virtual Assets” and thus cannot be taxed. This decision was accompanied by a statement explaining that NFTs are a sort of collectible item due to their uniqueness. Nevertheless, starting from the beginning of 2022 a tax of 20% was imposed by the FSC (Financial Service Commission) on incomes resulting from NFT trading if the NFT was intended to be used for investment or payment solutions.
To conclude, the South Korean NFT Market is far from maturating and many companies are yet to jump on the trend. As South Koreans are typically early adopters, the NFT Market in South Korea can be highly profitable for businesses capable of understanding the needs of the adopters. Finally, two major challenges lie ahead. The first one is about how regulated the NFT market can be and the possible impacts on profitability. The second one is how to increase the adoption in the South Korean population, especially for older generations.
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